Stay of a Permanent Injunction Pending

By Ben Snitkoff 
On June 27, 2013, Judge Zobel, in the District of Massachusetts, issued a post-trial order granting a permanent injunction, but stayed that injunction pending resolution of a co-pending reexamination before the Patent and Trademark Office. This case serves as an interesting study in balancing the factors for an injunction, and the effect a pending inter partes reexamination or inter partes review proceeding may have on that analysis.

The plaintiff, Smith and Nephew, Inc. (“S&N”) sued Interlace Medical, Inc. and Hologic, Inc. (collectively, “Hologic”) for infringement of two patents relating to arthroscopic surgical instruments and endoscopic cutting devices. After a ten-day trial, the jury found all the asserted claims valid and infringed.

S&N moved for a permanent injunction against the defendants. To obtain the injunction, S&N had to show:

(1) that it has suffered an irreparable injury;
(2) that monetary damages are inadequate to compensate for that injury;
(3) that an equitable remedy is warranted given the balance of hardships; and
(4) that the public interest would not be disserved.

S&N argued that because it was a direct competitor of Hologic, the infringement caused S&N irreparable injury. The court agreed, finding that S&N lost business relationships and opportunities as a result of Hologic’s infringement. However, the court stated that “the weight of this factor is somewhat diminished by the possibility that S&N’s asserted patent claims will be invalidated upon reexamination.” At the time the opinion was released, the asserted claims were subject to non-final rejection in the reexamination.

S&N also argued that monetary damages could not fully compensate it for Hologic’s infringement. Because S&N lost market share and business opportunities and suffered harm to its exclusive right to the patented devices, the court found that this factor weighed in favor of an injunction. The court did note that this factor did not weigh heavily in favor of an injunction because S&N could obtain ongoing royalties from Hologic.

Regarding the balance of hardships, the court was very receptive to Hologic’s arguments that, if an injunction were put in place, it would have to lay off 159 employees and lose over $266 million in investments in the products at issue. Further, the court found that the possibility of invalidation or amendment of S&N’s claims during the reexamination limited the hardship to S&N and emphasized the hardship of a permanent injunction to Hologic, The court also found that the public interest weighed against a permanent injunction, due to the benefit from patients and doctors having multiple options on the market.

The question of whether to grant the permanent injunction was very close, in no small part due to the pending reexamination proceedings. The court found that “S&N will be entitled to a permanent injunction if the reexamination proceedings and any subsequent appeals are eventually resolved in S&N’s favor.” However, the pending reexaminations “tip the balance against immediately enjoining Hologic.”

The court then allowed the motion for a permanent injunction, but opted to stay the injunction pending the outcome of the reexamination proceedings and subsequent appeals.

Only time will tell if other courts will consider pending post-grant proceedings in determining whether to grant an injunction. Defendants may be able to leverage pending reexamination or review proceedings to stay an injunction.

By Ben Snitkoff

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