This article originally appeared in sibling publication The Recorder.
Two tech-savvy federal judges in the San Jose courthouse are sending different messages on the standard for permanent injunctions in patent cases.
U.S. District Judge Lucy Koh in December famously denied sales bans sought by Apple Inc. in its patent fight with Samsung Electronics Co. with an order that left some wondering whether injunctions could still be won in complicated technology cases.
As though in answer, U.S. Magistrate Judge Paul Grewal on Thursday entered a permanent injunction sought by Brocade Communications Systems Inc. against rival A10 Networks Inc.
Grewal’s order spoke directly to recent hand-wringing over the “death, or at least the wounding, of the permanent injunction in patent cases involving hardware or software products with hundreds or thousands of components.”
Though injunctive relief is no longer a given following a finding of patent infringement, it remains a fundamental mechanism for protecting the rights of patent holders, Grewal held in an 18-page decision that opened with an obscure quote on equity from the 17th century jurist John Selden.
“Whatever the ‘trend’ of permanent injunctions in such cases, the Federal Circuit has made clear that injunctions can and should continue to issue upon the assembly and presentation of an appropriate record,” Grewal wrote.
Deeper in the opinion Grewal concluded: “In a situation such as this, where Brocade has shown that it practices its patent, that A10 is its direct competitor, and that Brocade does not license its patents, Brocade has shown the type of irreparable harm that a permanent injunction is intended to remedy.”
Brocade and A10, both San Jose-based companies, make devices that help busy websites like Google and Amazon.com control traffic by directing requests across multiple servers to maintain a balanced load. The patents at issue all relate to technology that spreads out requests and ensures servers don’t get overloaded.
A prior company run by A10′s chief executive officer, Lee Chen, was acquired by Brocade for $3 million in 2008. In 2010, Brocade sued A10 and Chen for patent infringement, trade secret theft, poaching key staff and copying software code.
As Apple was making its case against Samsung in early August, a jury in the same building handed Brocade a $112 million verdict.
Though most eyes were on the trial in Koh’s courtroom pitting the two consumer giants and their ranks of high-flying IP attorneys, the Brocade trial marked its own showdown of legal firepower.
Brocade was represented by a team of lawyers including Allen Ruby of Skadden Arps Slate Meager & Flom, Fabio Marino of McDermott Will & Emery and Annette Hurst of Orrick, Herrington & Sutcliffe. A10 turned to Scott Mosko and Scott Herbst of Finnegan, Henderson, Farabow, Garrett & Dunner and Latham & Watkins.
In November, A10 added more heft, hiring Morgan Chu of Irell & Manella to play a leading role in post-trial motions and appeals.
In addition to the injunction ruling, Grewal on Thursday ordered a new trial on patent and other damages, which amounted to roughly $50 million of the jury’s verdict.
A10′s CEO said in a press release the company would appeal the verdict and assured existing customers the injunction wouldn’t be a problem.
“We have already designed around the issue, completed rigorous testing of non-infringing software, and will ship AX Series products immediately to serve our outgoing and future orders,” Chen said in the statement.
Marino said Grewal’s order came to “what we think is the right conclusion.”
“After the recent decisions, people were concerned that you couldn’t get an injunction in a patent case,” Marino said. “My client is very happy.”
Marino’s take is that Grewal’s order is harmonious with Koh’s refusal to grant Apple an injunction after it won $1 billion in damages. “Obviously, they got to different results but that’s not because they took different approaches,” Marino said. “I think the evidence is different here.”
Other patent lawyers see things differently. The two rulings are ?”diametrically opposed,” one attorney who spoke on the condition of anonymity said. Another called them “radically different.”
In the Apple order, Koh relied heavily on an October decision from the U.S. Court of Appeals for the Federal Circuit requiring a “causal nexus”, or direct link, between infringement and irreparable harm for a preliminary injunction to issue. If the harm alleged is lost sales, a company would have to show a specific copied feature specifically drove consumer demand.
Koh referred 19 times to the “causal nexus” standard in her December ruling, concluding Apple had not shown a sufficiently strong link between Samsung’s infringement and consumer choice.
Grewal also addressed the Federal Circuit’s opinion in Apple v. Samsung, 12-1507. That opinion, dubbed Apple II, overturned Koh’s decision to grant a preliminary injunction in a lawsuit related to last year’s trial.
Grewal noted the Apple II decision came in the context of a preliminary, not a permanent, injunction. More recent Federal Circuit rulings on permanent injunctions feature a “curious absence of references to the causal nexus standard,” Grewal noted.
In the end, Grewal determined Brocade had proven “a sufficient nexus between the established infringement and irreparable harm from the loss of its exclusive right to practice its patents.”
He granted injunctions despite concluding that Brocade had not shown patented features drove sales or consumer demand.
Brian Love, a law professor at Santa Clara University Santa Clara University School of Law, wrote in an email that Grewal focused his analysis on Brocade’s loss of exclusivity, rather than its loss of sales.
Though different facts and technology make it hard to compare the cases, Love said Grewal seemed to apply a more lenient standard than Judge Koh.
“Judge Grewal provides relatively little analysis of whether the inventions covered by the infringed claims were the driving force behind customers’ decisions to purchase from A10 rather than Brocade,” Love wrote. “However, Judge Grewal stresses instead that unlike Apple’s patents, which had previously been licensed to HTC, Brocade’s patents had never been licensed.”
Different outcomes in these high-stakes IP cases may be no surprise considering courts are grappling with quickly evolving case law from the appeals court.
“Much of the conversation,” said Colleen Chien, another IP law professor at Santa Clara, “is happening between the Federal Circuit and the Northern District.”
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