Greenshift Corporation (GERS)

[Skribe]

And I think it will pass the 4 Factor Test.

PRELIMINARY INJUNCTIONS IN PATENT INFRINGEMENT CASES
April 1, 2002
Under 35 U.S.C. § 283, courts have the discretion to "grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." One type of injunction is the preliminary injunction, which serves as a powerful mechanism for obtaining prompt equitable relief against an accused patent infringer. While the preliminary injunction is intended to protect a patent owner's rights during the course of the lawsuit, it has the potential to effectively terminate the lawsuit. By prohibiting infringing activity, the preliminary injunction may force the accused infringer to take a license from the patent owner or, if the licensing option is unavailable, may even force the accused infringer to discontinue its infringement. Courts perceive the preliminary injunction as an extraordinary form of relief not to be granted routinely but only upon a clear showing that such relief is justified and warranted in the circumstances.
Prior to the creation of the Federal Circuit in 1982, preliminary injunctions in patent infringement cases were difficult to obtain. Departing from earlier patent case law, the Federal Circuit made preliminary injunctions more attainable by adopting, basically, the same four factor balancing test used for evaluating motions for preliminary injunctions in other types of suits and reducing the burden of proof standard from the "beyond question" to a "clear showing" standard. While these modifications have increased the number of preliminary injunctions granted in patent infringement cases, the relief is far from automatic. When considering whether to move, a patent owner must examine the preliminary injunction criteria and carefully assess whether it can meet the threshold requirements.
The Four Factor Test
A moving party is entitled to a preliminary injunction if it can succeed in clearly showing "(1) a reasonable likelihood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction's favorable impact on the public interest." While a preliminary injunction will not be granted unless the patent owner establishes both a reasonable likelihood of success on the merits and irreparable harm, when a clear showing of the first factor is made, the second factor is presumed. Once the patent owner establishes the these factors, the four factors must then be weighed against each other and against the form and magnitude of the relief requested.
Likelihood of Success on the Merits
In order to demonstrate a likelihood of success on the merits, a movant must show that it will likely prove infringement of one or more claims of the subject patent, and that at least one of those claims will also likely withstand validity and enforceability challenges, which may be raised by the accused infringer. Where the accused infringer raises "a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove 'lacks substantial merit,' the preliminary injunction should not issue." A patent owner may present a clear case supporting the validity of the patent-in-suit by showing, for example, that the patent has successfully withstood prior validity challenges or that the industry has for a long time acquiesced in the patent's validity. In cases where the validity of the patent goes unchallenged, the patent owner is entitled to rely on a "presumption of validity" to establish the likelihood that the patent will be found valid at trial and need not present any evidence on the issue.
Irreparable Harm
Irreparable harm is presumed when the patent owner has made a clear showing of the patent's infringement and validity. However, because the presumption of irreparable harm is rebuttable, and because the Federal Circuit has provided limited guidance as to the factual showing required to rebut the presumption, a patent owner will typically proffer evidence on the issue. Patent owners have argued, for example, that it is unlikely that the accused will be able to pay a judgment of legal damages; that the patentee has licensed the product; or that the opportunity to increase market share will be lost if the accused is permitted to continue its sales. Argument concerning the age of the patent, especially where the subject matter of the patent involves rapidly changing technology, also may tend to show irreparable harm. Accused infringers, in demonstrating the unlikelihood of irreparable harm, have argued, for example, that the patent owner unduly delayed in moving for the injunction; that the patentee is not marketing the invention; or even that the accused has stopped selling the allegedly infringing product and has represented that it would not resume sales.
Balance of Hardships
District courts have been given broad discretion in evaluating which party would suffer greater harm should an injunction be erroneously issued or denied. Courts must consider the movant's showing of likelihood of success but "must remain free to deny a preliminary injunction, whatever be the showing of likelihood of success, when equity in the light of all the factors so requires." When balancing the hardships of the parties, courts consider such criteria as whether the parties are directly competing, the respective sizes of the parties, and the significant financial effect that may result should the injunction be granted.
The Public Interest
In patent infringement cases, the public interest factor is usually not determinative unless "there exists some critical public interest that would be injured by the grant of preliminary relief." The public interest consideration has been a predominant focus in cases involving, for example, products used to treat serious medical conditions, i.e. where the public interest is best served by allowing an alleged infringer to continue its manufacture and sale of badly needed medical supplies.
Situations Favoring Moving for Preliminary Injunction
A patent owner contemplating moving for preliminary injunctive relief must consider its financial position and whether it can post the required bond should a preliminary injunction be issued. The bond can be sizeable as it represents an estimate of the damages to be paid to the alleged infringer should the alleged infringer prevail at trial. The court has the discretion to determine the amount of the bond. The bond-posting element alone may decide the issue of whether or not to move.
Instances where a motion for a preliminary injunction may be appropriate include circumstances where the patent is near the end of its term and will likely expire before trial; the accused product or process literally infringes and the patent has already sustained a validity challenge; the market for the patented product is short-lived; and the patent owner does not have sufficient resources to survive a full-blown lawsuit and is being forced out of business by the alleged infringer.
While courts do not freely grant preliminary injunctions, the chances of prevailing on a motion for this extraordinary relief have increased in patent cases since the formation of the Federal Circuit. The decision whether to move, nevertheless, requires a careful analysis of the balancing factors.

http://www.bakerbotts.com/infocenter/publications/detail.aspx?id=b2f8aa86-5740-4d9b-98d2-90adec3e87d2

Thank's Slashnut and Skunk for all the great research you share!