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Insmed Incorporated Message Board

  • pineguin pineguin Dec 29, 2006 10:49 AM Flag

    What the eBay case means

    The following comments are personal opinion.

    It appears that, historically, injunctions to enforce patent rights were easier to come by than in other fields of law. Patent lawyers would get a trip on having them issued as they are the ultimate sanction. They are now mostly upset at the eBay decision as it will likely limit their ability to make outrageous amounts of money.

    This was so because the Patent Act states that "patents shall have the attributes of personal property" including the right to "exclude others from using the invention".

    The lower courts (district courts and Court of Appeals)found that this wording meant that the Patent Act granted special status to enforce patent rights by way of injunctions.

    In the eBay case, the supreme court stated that the Patent Act does not provide for any special status, special rule or legal presumption that might facilitate the issuance of an injunction in patent cases. It stated that patent cases are no different than any other cases and the district court must apply the standard criteria for determining whether to grant an injunction.

    The standard criteria are a four factor test based on the principles of equity.

    1- whether the patent holder has or has not suffered an irreparable injury;
    2-whether the remedies available at law, such as monetary damages, are inadequate to compensate for the irreparable injury (if suffered);
    3- the balance of hardships between plaintiff and defendant;
    4-whether the public interest would be disserved by a permanent injunction.

    This principle must be followed by the district court.

    In the eBay case, the Supreme Court was addressing a situation where the plaintiff was a patent troll. The eBay case is relevant to Insmed but not in the way many of you have professed. It is not a knock out punch against the issuance of an injunction against Insmed.

    The eBay case sets the direction for courts to evaluate whether an injunction should issue. It also implicitely suggests that injunctions in favor of patent trolls should not be issued.

    Genentech/Tercica are NOT patent trolls. They are not patent holders with no intent of manufacturing their invention. They are not out to blackmail society and commerce into giving them money to license their patent.

    What can Insmed do with the eBay case?

    1-It should clearly state in its written arguments that the burden of proof lies with the plaintiff. The burden is a standard burden and may not mean much in the outcome. However, in a close call, it can tip the balance and Insmed needs all the ammo it has.

    2-It should state that the principles of equity apply with equal force. That is that the four factors are to be weighed equally. The court must consider all four factors. Insmed has nothing to lose by clearly stating what is implicit. Why say this? The answer will become clear when I post my next memo dealing with irreparable injury.

    3-It should go outside patent cases to try to find cases that can be particularly helpful;

    4-State that the rights created by the issuance of a patent are DISTINCT from the legal remedies available at law. Specifically, an injunction is a remedy, it is not a right. It is accessory, not inherent.

    5- Acknowledge and state in the written arguments the statement of the Supreme Court that "the decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion". Lawyers will undrstand why.

    The eBay decision sets the Appeals Court back on a straight line. It does not tip the scale in favor of Insmed.

    Later, if my family gives me the time, I will address the four factors as they apply to Insmed and Tercica, as they have been applied in recent cases and comment on Tercica's motion for permanent injunction.

    Insmed has a lot of work cut out for it.

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