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Law Times • February 9/16, 2009 FOCUS PAGE 11 Canada should keep eye on U.S. patent ruling BY JULIUS MELNITZER For Law Times ruling of the U.S. Court of Ap- peals for the Federal Circuit in MercExchange v. eBay. The Court of Appeals had I granted patent holder MercEx- change an injunction against eBay. But the high court unani- mously sent the case back for reconsideration, reasoning that trial judges should have greater discretion in deciding whether to grant permanent injunctions. The high court also stated that the usual four-factor test — irreparable harm, inadequacy of available remedy, balance of hardship, and public interest — for determining whether equita- ble relief should be granted was applicable to patent cases and ought to have been applied. Although the court was unan- imous in its disposition of the case, and unanimous in reason- ing that there were no automatic rules or exceptions governing the granting of injunctions, there were two "concurring" but conflicting opinions that left key issues up in the air. Justice Anthony Kennedy, writing for four members of the n May 2005, the U.S. Su- preme Court surprised the IP bar by overturning the panel, said judges should con- sider deviating from the practice of granting injunctions in three types of cases: where the plain- tiff was a "patent troll," where the patents were of questionable validity, and where the offending patents were relatively minor el- ements of an overall invention. But Chief Justice John Rob- erts, writing for the remaining three members of the panel, said that courts should rarely refuse to grant injunctions because injunc- tions were the only way to give effect to patent holders' "right to exclude." He cautioned that in- junctions in patent cases should not be denied on a "whim." "All the headlines suggested that injunctions were dead in patent cases in the U.S., but the real message was that injunctions were not automatic and that trial judges would have to look at the facts closely in deciding whether to grant them," says Sheldon Burshtein of Blake Cassels & Graydon LLP's Toronto office. Neil Henderson of Borden Ladner Gervais LLP's Toronto office is of similar mind. "eBay was just an adjustment that ratcheted up the require- ment for getting injunctions by one step," he said. A study by Wolf Greenfield & Sacks P.C., a Boston-based Bilski 'good first step' Continued from page 9 subjected to U.S.-style BMP litigation in the DataTreasury case, is pleased with Bilski. "Most industry participants see the decision as a good first step to reining in BMPs," says Chris Donnelly, counsel, Canadian law, at Manulife Financial. Still, Bilski is not yet etched in stone. In late January, Bilski sought leave to appeal from the U.S. Supreme Court. However that may be, there's no denying a definite trend to convergence between U.S. and Canadian law regarding the patentability of BMPs. "What is certain is that Canada, the U.S., and even the Euro- pean Union are gradually narrowing the differences that exist in their approaches to the patentability of BMPs," Henderson says. In any event, the final word is not yet in. The case has been appealed to the Federal Court of Appeal and scheduled for hearing on April 21. LT Most of our successes come in court… …but getting them on the world stage is nice too. Dimock Stratton llp is proud to be named Canadian Patent Contentious Firm of the Year 2008 by Managing Intellectual Property. IP law firm, of 50 cases decided since eBay bears out the notion that the ruling would not have a cataclysmic effect. "Although eBay made it tougher to win injunctions in patent-infringement cases, most plaintiffs still win them — but only if they are actually compet- ing in the marketplace," says Al- len Rugg, a senior litigator with Wolf Greenfield. Federal district courts and the U.S. Court of Appeals for the Federal Circuit issued prelimi- nary or permanent injunctions in 37 of the 50 cases examined. "These were traditional in- fringement cases involving com- petitors where irreparable injury — like loss of goodwill or un- quantifiable market impact — could be proved," Rugg says. In several of the 13 cases in which injunctions were denied, the plaintiffs were not competi- tors but rather firms seeking to collect licence fees. "Other factors cited by courts that denied injunctions included the failure to offer any evidence of irreparable injury, a prior vol- untary cessation of infringing activity, or an admission by that plaintiff that damages were cal- culable," Rugg says. The point is that plaintiffs interested in seeking an injunc- tion must assess the strengths and weaknesses of their case strategically. The key step in doing so, ac- cording to Rugg, is determining whether the plaintiff 's business model is consistent with seek- ing an injunction or with prov- ing damages. "Patent holders now must prove that they themselves, as opposed to their licensees, have or will suffer irreparable harm," Inc. and The Proctor & Gamble Co. v. Unilever PLC and Lever Bros. Ltd. (1995), the Ontario Court of Appeal affirmed a find- ing of infringement but refused to grant injunctive relief against Unilever after the trial judge found that damages were an ade- quate remedy. The court reached its conclusion even though there was no suggestion that Unilever, a large operating company, was analogous to a patent troll. Despite the differences, it's Sheldon Burshtein says 'the real message was that injunctions were not automatic.' Rugg says. "Irreparable injury and the inadequacy of money damages are no longer pre- sumed. If the plaintiff has dem- onstrated a willingness to ac- cept licence income, the courts have held that the plaintiff has basically admitted that money damages are adequate." There is an exception that ap- plies to universities and other re- search organizations that do not practise the patented technology and rely instead on monetizing it through licence fee income. "Only one case involving a research organization has come up since the eBay case, and the plaintiff won the injunction," Rugg says. Canadian IP lawyers, however, should note that even the relaxed approach to injunctions in eBay contrasts markedly with Cana- dian jurisprudence, which tends to lean against the granting of injunctions. For example, in the leading case of Proctor & Gamble important for Canadian law- yers to keep an eye on the de- velopments south of the border. Consider, for example, that the Canadian government took the rare step of filing an amicus brief in support of Research In Motion during the company's high-profile defense of the in- fringement suit brought by NTP Inc. against RIM's ubiq- uitous BlackBerry product. The government's brief lamented the application of U.S. patent law to cases in which a component of the alleged infringing activi- ties were in Canada. "Canada also believes," the authors added, "that this deci- sion, as it relates to the interpre- tation and scope [of U.S. patent law], is susceptible of interpreta- tions that may have unfortunate and unintended consequences affecting Canada's interests, as well as the interests of Canadian companies carrying on multi- jurisdictional operations." The Canadian Chamber of Commerce and the Informa- tion Technology Association of Canada also intervened in RIM, marking an awareness that U.S. IP decisions can land solidly on Canada's business landscape and the role of the lawyers who are its primary advisers. LT Dimock Stratton llp experience. results. 20 Queen W. 32nd fl, Toronto | 416.971.7202 | dimock.com Untitled-2 1www.lawtimesnews.com 12/2/08 2:41:44 PM