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Will Winter v. NRDC Hasten The End Of The “Substantial Question Of Patentability” Defense To Preliminary Injunctions?

12.05.08

Dabney J. Carr, IV

Robert A. Angle

What do two recent Supreme Court decisions on the danger of sonar to whales and the arrest of American civilians in Iraq have to do with patent litigation?  Perhaps a lot.  In fact, these decisions may limit or end the “substantial question of patentability” defense to a motion for preliminary injunction.

Ever since eBay, Inc. v. MercExchange L.L.C overturned long-standing Federal Circuit precedent regarding a patentee’s right to a permanent injunction after a finding of infringement and no invalidity, there has been uncertainty about the availability of both preliminary and permanent injunctive relief in patent cases.  Some of this uncertainty may have been resolved by two recent Supreme Court decisions that have nothing to do with patents.  In a decision in early November, Winter v. Natural Resources Defense Council, the Court overturned a preliminary injunction which had barred the Navy’s use of sonar during training because of the danger of injury to marine mammals.  In Winter, the Court emphasized the traditional four-factor test for a preliminary injunction and chastised the Ninth Circuit for concluding that a plaintiff who demonstrates a strong likelihood of success on the merits need only show a “possibility,” rather than a “likelihood,” of irreparable harm. 

Winter cited repeatedly to the Court’s decision in June of this year in Munaf v. Geren, which overturned a preliminary injunction barring the U.S. Military from transferring an American civilian arrested in Iraq for insurgent activities to the Iraqi government.  In Munaf, as in Winter, the Court made crystal clear that a trial court must consider all four of the traditional factors –– the likelihood that the plaintiff will succeed on the merits of the underlying claims, the likelihood that the plaintiff will suffer irreparable harm without an injunction, the balance of hardships between the parties, and the public interest – when considering a preliminary injunction.  While Winter focused on the likelihood of irreparable harm, in Munaf, the issue was likelihood of success on the merits.  There, the lower courts had focused solely on the issue of jurisdiction and held that the merits of the claims were irrelevant.  The Supreme Court flatly rejected that analysis and held that it was an abuse of discretion for the lower court to grant a preliminary injunction without finding that the plaintiff was likely to succeed on the merits of the underlying claim.

The Supreme Court’s decision in Winter comes on the heels of a sharply split Federal Circuit decision on the standard for obtaining a preliminary injunction in a patent case, Abbott Laboratories v. Sandoz, Inc.  The majority in Abbott appears to follow the signals in Winter and Munaf that courts should not deviate from the traditional four-factor test for a preliminary injunction and thus may limit or end the “substantial question of patentability” as a defense to a preliminary injunction motion if followed by other Federal Circuit panels in the future.  In Abbott, the Federal Circuit faced a relatively routine preliminary injunction issue.  Abbott moved for a preliminary injunction in its patent infringement suit against Sandoz relating to its extended release formulation of the antibiotic clarithromycin.  The District Court analyzed the traditional four factors for a preliminary injunction and concluded that Abbott prevailed on each of the factors.  A 2-1 majority of a panel of the Federal Circuit affirmed the decision.

The Federal Circuit’s reasoning in Abbott is not nearly as interesting as the sharp disagreement between Judge Newman, who wrote the majority opinion, and Judge Gajarsa, who wrote the dissent, on the proper standard for showing a likelihood of success in patent cases.  In dissent, Judge Gajarsa claimed that the majority had ignored many years of Federal Circuit precedent, which held that a preliminary injunction should not issue if the defendant raises a substantial question concerning validity that the patentee cannot prove lacks substantial merit.  Judge Newman (the third member of the panel did not join this portion of the opinion), countered that under eBay there was no reason to give patent cases unique treatment.  The standard is likelihood of success on the merits, she wrote, not whether there is a substantial question regarding invalidity or whether the patent is “vulnerable.”  Judge Newman went on to review precedent in the Supreme Court and in every other Circuit Court of Appeals and concluded that no other Circuit has held that when the defendant has presented a “substantial question” on its side of the dispute, an injunction is not available. 

Winter and Munaf appear to support Judge Newman’s analysis, even though, in both cases, the Supreme Court overturned the lower courts’ decision to grant a preliminary injunction.  Winter and Munaf involved extraordinary facts, and the Court based its decision to overturn the preliminary injunctions in those cases on considerations of the public interest and the power of the judicial branch that are not relevant to cases between private litigants.  For patent cases, the important holding in Winter and Munaf is that the Court reaffirmed the traditional four-factor test and clearly signaled that all four factors in the analysis are important.  A strong showing on one factor, such as likelihood of success or even irreparable harm, does not lower the plaintiff’s burden on the other factors. 

Judge Newman’s analysis in Abbott shares the Supreme Court’s emphasis on the traditional four-factors for a preliminary injunction.  Combined with the Court’s holding in eBay that the preliminary injunction analysis in patent cases is the same as in other cases, Winter and Munaf suggest that Judge Newman correctly concluded that it should be no more or less difficult to obtain a preliminary injunction in a patent case than in any other type of litigation.  Judge Gajarsa’s dissent in Abbott, and the Federal Circuit precedent he cites, on the other hand, seem to add a factor to the traditional test -- that a plaintiff show not only the likelihood of success but make a higher showing of the lack of a substantial question regarding invalidity. 

The combined signal of Abbott, Winter and Munaf potentially marks a shift in the law governing preliminary injunctions in patent cases.  Both the majority and minority in Abbott stated that a district court should evaluate a request for preliminary injunction “in light of the presumptions and burdens that will adhere at trial.”  Thus, an alleged infringer defending a motion for preliminary injunction on the basis of invalidity bears a significant burden, one that is even more pronounced if infringement is clear.  As a result, all other things being equal, preliminary injunctions may be more likely to issue in future patent cases if other panels of the Federal Circuit follow Abbott's reasoning.  That conclusion appears to fly in the face of the Supreme Court’s repeated statements that preliminary injunctive relief is an extraordinary remedy available only upon a clear showing, but it is a logical result of the application of the standards set forth in Abbott, Winter and Munaf.

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