Emerging scholars series: cross-border injunctions in U.S. patent cases and their enforcement abroad.

AuthorTrimble, Marketa
PositionCompany overview

INTRODUCTION I. CROSS-BORDER INJUNCTIONS IN U.S. COURTS--A QUANTITATIVE VIEW II. CROSS-BORDER INJUNCTIONS IN U.S. COURTS--A QUALITATIVE VIEW III. ENFORCEMENT OF U.S. INJUNCTIONS ABROAD A. Enforcement of an Injunction B. Enforcement of a Contempt Order C. Alternatives to Injunctions and Their Enforcement Abroad IV. CROSS-BORDER INJUNCTIONS IN EUROPE A. Pan-European Injunctions B. Other Cross-Border Injunctions in Europe CONCLUSION INTRODUCTION

Injunctions play an important role in patent enforcement; the Federal Circuit Court pointed out the link between injunctive relief and the incentive to invent in its 1983 opinion in Smith International, Inc. v. Hughes Tool Co., where it stated that "[w]ithout the right to obtain an injunction, the right to exclude granted to the patentee would have only a fraction of the value it was intended to have, and would no longer be as great an incentive to engage in the toils of scientific and technological research." (1) Although it has since then become clear that the right to an injunction may not always function as an incentive but may serve as an inhibitor of inventing activity, the injunction has not lost its crucial position as a regularly-pursued remedy in patent infringement cases; patent holders almost always request injunctions and courts frequently issue them and from time to time enforce them if they are not complied with voluntarily. This Article examines the problem of enforcement of "cross-border injunctions"--injunctions that order or prohibit conduct outside the United States, (2) with a particular focus on cases in which such injunctions have been issued against non-U.S. entities, sometimes with no assets located in the United States. Although such cases may appear to be extreme outliers, surprisingly they are not uncommon, and they pose serious questions about the feasibility of the enforcement of injunctions.

As is generally true with any remedies, injunctions are effective only as long as there is the potential that once issued they can also be enforced. Their enforcement should not pose a significant problem when confined to the country of the court issuing the injunction but can become problematic when jurisdictions outside those of the issuing country become involved, since without their assistance the enforcement of the order of the issuing court may, as a practical matter, be very difficult, if not impossible. While in many cases a plaintiff can simply avoid the cross-border problem by filing a lawsuit in the jurisdiction of the anticipated enforcement, in some cases the rules of jurisdiction prevent such a solution. Patent infringement cases are a good example of a situation in which plaintiffs often do not have a choice--they must file in the country where the patent was issued notwithstanding the fact that the opponent's assets are located elsewhere. (3)

At first glance it might appear that cross-border enforcement problems should not arise in patent cases at all because of the territorial limitations of patent law; for a court to issue remedies for patent infringement under U.S. law, the allegedly infringing activity must occur within the United States. Therefore, one might expect that the alleged infringer would have to be domiciled in the United States or have some other significant physical presence in the United States in order to engage in such an activity. However, as U.S. law strives to encompass conduct beyond U.S. borders that harms the interests of U.S. patent holders, (4) injunctions issued by U.S. courts try to reach abroad. As this Article shows, plaintiffs request such injunctions notwithstanding the potential difficulties that enforcement abroad may cause.

While enforcement of a cross-border injunction against a U.S. entity is unlikely to pose significantly greater difficulties than enforcement of any other injunction (perhaps with the exception of evidentiary issues if a contempt order is sought and conduct abroad has to be proven before a U.S. court), the situation becomes complicated when the defendant is a foreign entity with no assets in the United States. In such cases there are two ways in which the enforcement problem may be mitigated. First, if the patent holder is fortunate enough to hold a parallel patent in the country of the activity to be stopped by an injunction, a lawsuit in that country can be a viable and more practical alternative. As opposed to a lawsuit in the United States, the foreign suit may not yield as much in terms of damages, but should provide more effective injunctive relief. Second, the patent holder may alleviate the enforcement problem by suing a domestic company that participates in the infringement along with the foreign infringer; a domestic distributor would be the typical example. In such cases, even if the plaintiff fails to secure enforcement abroad of the remedy awarded by the U.S. court against the foreign codefendant, the relief achieved against the U.S. co-defendant may be sufficient to prevent infringements in the United States--at least through the same distribution channels. However, if the mitigating approaches are not available, U.S. patent holders may have to sue foreign entities as the only defendants and thereafter face problems when trying to enforce remedies awarded by U.S. courts.

Cross-border enforcement problems in patent cases have attracted the attention of scholars studying the intersection of intellectual property and private international law; they have proposed that an international instrument be negotiated that would provide for smooth enforcement of judgments across borders (5) and have identified injunctions as a form of remedy that is likely to cause particular difficulties when those injunctions include requirements that the enforcing court cannot enforce because its law does not permit such a requirement to be imposed by courts. (6) Scholars have suggested that if the injunction cannot be fully enforced, the enforcing court should either award monetary relief instead of enforcing the injunction (7) or adjust the injunction to the needs of its own legal system while fulfilling--as closely as possible--the original intent of the issuing court. (8)

This Article complements the scholarship in the area of intellectual property and private international law/conflict of laws by providing an empirical picture of the number and character of cross-border injunctions issued in the United States against foreign entities and surveying the problems of enforcement of such injunctions in the current legal framework--a framework that lacks the support of an international instrument facilitating enforcement across borders. First, this Article presents original data on the frequency with which injunctions against foreign entities are requested and issued in patent cases filed in the United States. Second, it reviews the character of the injunctions against foreign entities and identifies those that are either explicitly aimed at cross-border conduct or implicitly involve such conduct and thus may require enforcement abroad. Third, this Article discusses methods of enforcing injunctions abroad and outlines the difficulties that are inherent in the methods and either common to enforcement of this type of remedy in a variety of types of cases or specific to patent infringement cases. Fourth, it offers a comparative perspective by presenting cases of cross-border injunctions issued in patent cases by European courts; it reviews both the "pan-European injunctions," which have been at the center of disputes among academics and practitioners for the past two decades, and other types of cross-border injunctions--the types observed in the practice of U.S. courts.

  1. CROSS-BORDER INJUNCTIONS IN U.S. COURTS--A QUANTITATIVE VIEW

    Injunctions prohibiting future infringement are a classical feature of patent infringement cases and tend to be frequently requested in U.S. courts. Although there were concerns about whether plaintiffs would stand as high a chance of obtaining injunctive relief as they did before the Supreme Court in eBay Inc. v. MercExchange, L.L.C., (9) in which the Supreme Court rejected a practice of almost automatic awards of such relief in patent cases, (10) injunctions continue to be issued frequently. According to the University of Houston Law Center Institute for Intellectual Property and Information Law, in seventy-one post-eBay rulings entered before October 17, 2008, courts awarded permanent injunctions in fifty-four cases, i.e. in 76% of cases where they were requested. (11) Since eBay, the statistics on injunctive relief have received well-deserved attention as practitioners have attempted to predict the chances of obtaining such relief and researchers have aimed to capture the effect of the eBay decision on the practice of district courts; however, notwithstanding this increased interest in injunctions, no data has been published that illustrates the cross-border aspect of injunctions requested and issued in U.S. courts in patent infringement cases.

    In this Part, I supplement the available literature by providing results that I have compiled as part of a larger project on cross-border enforcement of U.S. patent rights. I was able to arrive at the results by utilizing three data sources: the Stanford Intellectual Property Litigation Clearinghouse (IPLC), the University of Houston Law Center Institute for Intellectual Property and Information Law, and the Bloomberg Law database. Before presenting the results, I should comment on the relatively low number of cases in which injunctions were awarded. Although more than 2,500 patent cases are filed in the United States annually, (12) most result in settlement. According to the Houston Law Center, 85% of patent cases closed in 2005-2007 ended in settlement. (13) Some settlements result in a consent decree or consent order that may also include an injunction, but most settled cases are dismissed; therefore, in...

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