When hiring an attorney, another important issue for many clients is potential remedies. When a patent holder believes a competitor is wrongly infringing on its patent, they may wonder exactly what remedies are available, particularly if their own business is being harmed by the infringing use. Positively, the prevailing patent holder in a patent infringement case has a diverse set of options when it comes to remedies.
If the legal matter concludes before legal action starts, in other words, a settlement, the infringing use typically stops, and there may even be a license for the future use of the patented technology. On the other hand, if the matter concludes with a judgment of infringement by a federal court, the patent holder has remedies “at law” and “at equity”.
Remedies at law are a proxy for monetary relief (i.e., cold hard cash). Here, the court issues an order for the infringing party to pay the patent holder a set amount of money. The court can utilize one or more theories for determining the amount of damages, such as lost profits, an established royalty, or a reasonable royalty.
Nevertheless, just like with any monetary judgement, money sometimes cannot make the prevailing party whole. In these instances, remedies at equity are there to supplement the monetary damages. The primary remedy at equity available is the permanent injunction, which is basically a court order instructing the infringing party to cease infringing activities.
The permanent injunction is a powerful remedy, which can compel infringing parties to settle with the patent holder on difficult terms. (See, e.g., the famous NTP-Blackberry case). For many years, it was quite common for judges to award the permanent injunction once infringement was found. But in 2006, the Supreme Court of the United States changed the standard in the seminal EBay v. MercExchange case, which reestablished a four-factor test for granting the permanent injunction (i.e. patent holder has suffered an irreparable injury; that remedies available at law are inadequate to compensate the patent holder for that injury; considering the balance of hardships between the patent holder and defendant, a remedy in equity is warranted; and that the public interest would not be disserved by a permanent injunction). This, of course, raised the bar for the granting the permanent injunction, making them less common than in the past.
In the recent Nichia decision, the United States Court of Appeals for the Federal Circuit amplified the four-factor test, suggesting that each of the four factors must be found in order to grant the permanent injunction. (“The movant must prove that it meets all four equitable factors.”, page 21). The end effect here is that the bar for remedies at equity is again raised, forcing the patent holder to rely on the monetary damages in all but exceptional cases.
Because of this, if your business needs legal services, it is critical that you seek counsel of a qualified patent attorney, who can advise you of realistic remedies for a potential court action.