Rare Patent Injunction Praised on Appeal as 'Exemplary'
A federal appeals court ruling upholding a relatively rare permanent patent injunction offered guidance about how such injunctions can withstand judicial review.
Monday’s U.S. Court of Appeals for the Federal Circuit ruling in Broadcom Corp. v. Emulex Corp. affirmed Central District of California Judge James Selna’s December 2011 judgments that Emulex infringed Broadcom’s patent and that the patent would not have been obvious, and thus invalid, at the time of invention.
The panel also affirmed Selna’s April 3, 2012, injunction for Broadcom, all but forcing the Emulex products at issue from the market.
“[B]ecause the district court properly exercised its discretion in granting a permanent injunction with a well-crafted sunset period [or delay for certain products] this court also affirms that determination,” Chief Judge Randall Rader wrote, joined by judges Alan Lourie and Evan Wallach.
Both companies make Ethernet adapters used in devices that link computers in datacenters. The patent at issue is for digital communication systems receives transmitted signals and converts them into a form that can be used by a computer.
Rader noted that the litigants were direct competitors in a market with a limited set of customers. They sell components to manufacturers like Cisco Systems Inc., Dell Inc., Hewlett-Packard Co. and International Business Machines Corp., and product design is a key factor in their success.
Rader analyzed Selna’s application of the four-part test outlined in the Supreme Court’s 2006 precedent in eBay Inc. v. MercExchange LLC. On the first two prongs, Selna found that Broadcom suffered irreparable harm and that money damages wouldn’t adequately compensate the company. Selna then found that the balance of hardships favored an injunction because Emulex’s infringing sales comprised only a fraction of its revenues.
Finally, Rader found that Selna appropriately took into account public interest and equitable factors in establishing the 18-month sunset period to protect certain customers.
“The eighteen months allowed for time to remove the infringing product from the market without causing significant downstream disturbance for [original equipment manufacturers] and consumers. It tailored a permanent injunction to meet unique market concerns with a well-crafted sunset period. This court finds no abuse of discretion; in fact, this is an exemplary exercise of discretion in crafting a tailored equitable remedy,” Rader wrote.
Broadcom’s lawyers at Wilmer Cutler Pickering Hale and Dorr referred questions to the company, which did not respond to a request for comment. Emulex’s lawyers at Fish & Richardson also referred questions to their client, which also did not respond.
This article originally appeared in The National Law Journal.