In Genband, the Federal Circuit reversed the district court’s denial of permanent injunction based on the finding that there was no “causal nexus” between the infringement and alleged irreparable harm. The district court erred by requiring proof that the infringed feature was the sole driver of consumer demand, rather than a driver of demand.
Genband asserted several patents against Metaswitch in the Eastern District of Texas related to telecommunications, internet, and data network applications. A jury found for the patent owner on infringement with respect to one feature of Metaswitch’s multi-feature product. Genband requested entry of a permanent injunction. The district court denied Genband’s motion, holding that Genband failed prove that it was likely to suffer irreparable harm because it could not prove the infringed feature was the driver of consumer demand.
A patent owner may obtain a permanent injunction against an infringer only if it can show: (1) it has suffered an irreparable injury; (2) remedies available at law are inadequate to compensate for that injury; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) the public interest would not be “disserved” by a permanent injunction. To meet the irreparable harm component, the patent owner must prove there is a causal nexus between the infringement and the alleged harm.
The Federal Circuit held that a patentee may show causal nexus by providing evidence that the infringing feature is one of several features that cause consumers to make their purchasing decision or is a feature that makes the product more desirable. Specifically, the patentee may provide evidence that absence of the feature would make the product significantly less desirable. A patentee may further provide evidence of causal nexus by showing that the infringement caused damage to their reputation as an innovator, lost market shares, or lost downstream sales.
Accordingly, the infringing feature need not be the sole drive of consumer demand for the product, but must be a contributing drive of consumer demand for the product. The Federal Circuit vacated the denial of permanent injunction and remanded to the district court for reconsideration.
Key Takeaway: A permanent injunction will only be granted upon a showing of causal nexus between the irreparable harm and the infringing feature of a multi-feature product. The infringing feature need not be the only drive of consumer demand for the product, but the patentee must show that absence of the feature would make the product significantly less desirable to consumers.