Patent Law

The injunction decision in Innogenetics deserves a second look. In that case, the Federal Circuit closely examined the Wisconsin District Court’s award of both injunctive relief and $1.2 million in forward looking damages.

The $7 million total damage award was divided into two parts by the jury: a $5.8 million “market entry fee” and a $1.2 million “ongoing royalty payment.”*  This award “exactly tracked” the damage award proposed by the patentee’s expert and also fit within the jury instructions, which called for “both an up-front payment and an ongoing royalty payment.” 

In addition to receiving a lump-sum to cover ongoing royalties, the District Court also awarded an injunction to stop ongoing infringement.  On appeal, the CAFC rejected this double-dipping. In her opinion, however, Judge Moore, was careful to cast the reversal in the language of eBay v. MercExchange.  Thus, the appellate panel held that a patentee who asked for and received future licensing royalties has no standing to complain of irreparable harm.

The reasonable royalties awarded to Innogenetics include an up-front entry fee that contemplates or is based upon future sales by Abbott in a long term market. When a patentee requests and receives such compensation, it cannot be heard to complain that it will be irreparably harmed by future sales.

Although the court did not use the words, the rule here appears to be akin to that of equitable estoppel.  This is a simple case for the appellate panel because the patentee asked for the forward looking damages.  However, the panel also implicitly accepts forward looking damages as an adequate substitute for injunctive relief.  The collection of damages negates irreparable harm — the most important eBay factor.**

On remand, the CAFC also vacated the lump-sum future sale damages. Without discussion, the appellate panel ordered that the district court instead implement a compulsory license with a running royalty payment. The only clue to the court’s reasoning lies in Footnote 9, which notes that the shift to a running royalty would allow the district court to retain jurisdiction to “ensure the terms of the compulsory license are complied with.” 

• * Innogenetics argued a semantic mix-up, that the “ongoing royalty” was intended only to apply from the point of infringement through judgment. The CAFC rejected that contention.
• ** Moreover, this factor [the lack of inequitable harm] greatly outweighs the other eBay factors in this case.
• Read the decision.
• Patently-O: Appealing the Kitchen Sink
• Patent Prospector: OOPS
• Patent Docs: Innogenetics Loses Injunction
• Patent Docs: Discussion of District Court Decision
• Patent Baristas: Abbott Learns Not To Turn In Its Homework At 9:30 p.m. On The Night Before The Test

Innogenetics v. Abbot Labs (Fed. Cir. 2008)